| 24(1) | 901448 |
| J.P. Dunn | |
| (613) 957-8961 | |
| 19(1) | EACC9642 |
September 19, 1990
19(1)
This is in response to your correspondence of June 25, 1990 requesting a technical interpretation with regards to a situation wherein bank debentures are converted to deposits payable on a fixed date and, more specifically, whether such conversion would constitute a disposition for purposes of the Income Tax Act (the "Act").
As the situation described by you appears to involve an actual situation with identifiable taxpayers, we are unable to comment specifically except in the context of an advance income tax ruling. We would, however, offer the following comments relative to your enquiry.
The determination of whether a disposition occurs in a particular situation is a question of fact which can be determined only after a review of all salient facts.
Interpretation Bulletin IT-448 dated June 6, 1980 discusses the factors which the Department considers in determining if a certain transaction constitutes a "disposition" of a security within the meaning of that term in paragraph 54(c) of the Act. Paragraph 7 of the bulletin lists several changes in respect of debt obligations which, when implemented, are considered to precipitate a disposition of the obligation. This paragraph, however, contains a caveat to the effect that this would not be the case where the amendment to the obligation is carried out pursuant to an authorizing provision contained in the original terms of the obligation. Accordingly, it is our opinion that the exercise of a provision contained in the original terms of a debt obligation should generally not result in a disposition of the debt obligation.
Although we trust that our comments are of assistance to you, they do not constitute an advance income tax ruling and are, therefore, not binding upon the Department with respect to any particular situation.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate